CalWatchDog.com Exclusive: Cal State Lies about Executive Pay

by CalWatchdog Staff | March 2, 2012 11:22 am

MARCH 2, 2012

By JOHN HRABE

California State University officials have provided false and misleading information to the public about the total compensation provided to at least one of the system’s 23 presidents, a CalWatchDog.com investigation has found. According to IRS documents of the Cal State University Los Angeles Foundation, CSULA President James Rosser reported receiving $515,612 in total compensation for fiscal year 2009-10, which ended on June 30, 2010. The half-million dollar figure is roughly $200,000 more than CSU’s previously cited base salary of $325,000 per year. (For this and other numbers, please see the 15 pages of confirming documents below.)

A university spokeswoman confirmed to CalWatchDog.com that, in addition to his base pay, housing allowance and car stipend, Rosser also receives more than $134,000 per year in “nontaxable benefits such as retirement, FICA, health, etc.” This disclosure is the first time that Cal State has acknowledged the complete and accurate total compensation for its top executives. Rosser’s more than half-million-dollar annual compensation package raises questions about the true cost of other college executives, including San Diego State University’s Elliot Hirschman and Cal State Chancellor Charles Reed, both of whom receive “base pay” in excess of $400,000 per year.

Legislator Calls for Immediate Pay Freeze & Audit

Republican and Democratic legislators quickly criticized Cal State for its apparent deception. One influential member of the Assembly’s Committee on Higher Education is urging the Assembly leadership to freeze CSU’s pay and benefits and conduct a line-by-line review of actual spending records.

“If it’s true that the CSU has been hiding important budget information from the Legislature and public review, potentially in violation of state law and the CSU’s own rules, then I believe there needs to be consequences,” said Assemblyman Anthony Portantino, D-La Canada Flintridge. “It is PAST time for the CSU to be fully and completely transparent. I call on the Assembly Leadership to support my continuing effort to FREEZE the pay and benefits for the CSU executives until we have adequate time to review, line-by-line, actual spending records.”

Senator Joel Anderson, R-Santee, who has been critical of the Cal State Board of Trustees for its executive compensation policies, also disapproved of CSU’s misinformation campaign. “It is always frustrating when intellectually dishonest bureaucrats play hide-the-pea with public records requests,” he said.

The new revelation of the total compensation package provided to Cal State L.A.’s president contradicts at least five instances in which Cal State officials have claimed or implied a lower compensation amount. At a minimum, Cal State has violated its commitment to be “as open and transparent to the public as possible.”

Cal State Executive Compensation Website

Following last year’s public outcry over Hirschman’s $400,000 base salary, Cal State established a special[1] webpage for public information on its executive compensation policies. “As a public institution, the California State University is committed to being as open and transparent to the public as possible,” the website reads. “In response to recent discussions about the California State University’s executive compensation policies and practices, we have created this central page to make the documents related to those policies more readily accessible.”

The website makes no reference to any CSU president receiving more than half-a-million dollars per year in taxpayer-funded benefits. The webpage contains an executive compensation summary, titled “2011/2012 CSU Executive Compensation Summary[2].” This summarizing document lists Rosser’s total compensation as $325,000 per year, plus a $60,000 housing allowance. It excludes any reference to a car allowance or other non-taxable perks, such as retirement, FICA or health benefits.

Cal State’s Executive Compensation website more closely reflects the compensation amount disclosed to the California State Controller’s Office, which maintains a database of public employee salary information. According to State Controller John Chiang’s Government Compensation database[3], Cal State L.A.’s president receives $372,461 in “Total Wages Subject to Medicare (Box 5 of W-2).”

March 2011 Mercer Report

Cal State’s campaign to mislead the public about the total compensation package provided to its top executives dates back to last March, when the system hired the high-priced Mercer consulting firm[4] to conduct a competitive pay analysis. The Mercer Report[5], which has been criticized by California Watch[6] for using bogus comparator institutions, included two references to Rosser’s compensation of $325,000. Under Section IV, “Compensation Analysis,” Mercer concluded that Rosser’s salary was 31 percent lower than the “market average” of $425,945 per year. CalWatchDog.coms revelation of Rosser’s total compensation of $515,612 per year would dramatically alter this comparison. Instead of trailing the “market average” by 31 percent, Rosser would exceed it by 21 percent.

The Mercer Report also included two references that Cal State failed to provide incentives to its presidents, a claim that is refuted by the IRS documents. “CSU does not offer its presidents any short-or long-term incentive programs,” the consultants wrote on page 11 of the report. The report continued on page 12: “CSU does not offer incentives, and therefore its total cash compensation is equivalent to base salary.”

In advance of an August 2011 meeting of the Board of Trustees, CSU staff prepared a 15-page report titled, “Cash Compensation of Public University Chief Executives.”[7] The document summarized the Mercer Report and other executive compensation data. In that report, Rosser’s total compensation is listed at $325,000, with empty boxes in a table that included options for supplemental compensation, bonuses and deferred compensation.

On February 9, CalWatchDog.com asked Claudia Keith, Cal State’s assistant vice chancellor of public affairs, to confirm the “total compensation package, including taxable and nontaxable benefits” for Cal State L.A.’s president.

CalWatchDog.com asked, “The total compensation package, including taxable and nontaxable benefits, consists of the salary, housing and car allowance. For example, James Rosser, President of CSULA, receives a salary of $325,000, plus a $60,000 housing allowance, and the $12,000 annual car allowance. (Based on the links you’ve supplied). Does that represent Mr. Rosser’s total compensation, including all taxable and nontaxable benefits?”

Keith replied, simply, “Yes.”

Twenty days later, when CalWatchDog.com supplied Keith with the IRS documents, Cal State finally came clean about the true cost of CSULA’s presidential compensation package.

Keith wrote, “Total if $380,666 in taxable compensation which includes $308,666 in salary (this was year we had furloughs for 1/2 the year) + $60,000 housing and $12,000 car allowance. The $134,946 are nontaxable benefits such as retirement, FICA, health, etc.”

The Cal State Office of Public Affairs’ misinformation, or possible deception, substantiates Portantino’s charge that CSU has repeatedly stifled legislative attempts to rein in the high compensation of public administrators.

“For the past several years, the CSU administration has worked in concert with Assembly Leadership to squash legislation dealing with outrageous executive compensation practices,” he said.

Portantino has proposed legislation that would impose a two-year pay freeze[8] on public employees that earn more than $100,000 per year. AB 1787 would affect more than 3,300 state employees, excluding higher education executives at the University of California and Cal State systems.

On January 1, new legislation took effect that provides the public with greater tools to investigate the financial statements and contracts of public colleges and universities. SB 8,[9] authored by state Senator Leland Yee, D-San Francisco, expanded the state’s Public Records Act to include UC, CSU and the community college auxiliaries and foundations.

State Controller John Chiang’s Government Compensation database: http://lgcr.sco.ca.gov/CompensationDetail.aspx?entity=Education&id=4,501&load=ByDepartment&year=2010&EntityName=California+State+University+%28CSU%29+&Positions=&GetCsu=True&ItemCount=24&filter=Classification:president